By Courtney Schlisserman Dec. 24 (Bloomberg) -- Orders for goods meant to last several years rose in November, pointing to increases in spending and production that will help sustain the expansion into 2010. Bookings minus demand for transportation equipment, which is often volatile, gained 2 percent last month, almost twice as much as forecast, figures from the Commerce Department showed today in Washington. A 33 percent slump in civilian aircraft limited the gain in total durable goods orders to 0.2 percent. Companies such as 3M Co. are among those anticipating increases in spending on research and new products next year, which may help sustain growth and generate jobs. A record reduction in inventories over the first nine months of the year will also give factories reason to speed up assembly lines. “Businesses are starting to respond to a stabilization in demand by increasing production,” Michelle Meyer, an economist at Barclays Capital Inc. in New York, said before the report. “We’re seeing an improving trend and we’re seeing a continued rebound in manufacturing.” Economists forecast orders would increase 0.5 percent, according to the median of 72 projections in a Bloomberg News survey. Estimates ranged from a drop of 1.3 percent to an increase of 3.5 percent. The gain in bookings was the second in the past three months, following an unrevised 0.6 percent drop in October. Orders excluding transportation were projected to rise 1.1 percent, according to the Bloomberg survey median. Estimates for this ranged from increases of 0.3 percent to 3 percent. Broad-Based Gains Gains outside of transportation were broad-based, with increases in demand for machinery, metals, computers and communications gear. Shipments of non-defense capital goods excluding aircraft, which is used in calculating gross domestic product, climbed 0.8 percent in November and October’s reading was revised to show a 1.5 percent jump, compared with a previously estimated 0.3 percent drop. Bookings for such goods, a proxy for future business spending, increased 2.9 percent in November. The figures suggest business investment will contribute to growth. A report earlier this week from the Commerce Department showed the economy grew at a 2.2 percent annual pace, less than previously estimated. Federal Reserve policy makers last week indicated the recovery is gaining strength and repeated a pledge to keep the benchmark interest rate low for an “extended period.” They kept the overnight lending rate between banks in the range of zero and 0.25 percent, where it has been for a year. Improving Sales Combined sales at manufacturers, wholesalers and retailers have been increasing since June, giving businesses the confidence to begin updating machinery. Purchases of equipment and software increased at a 1.5 percent pace in the third quarter, the first gain since 2007, the Commerce Department reported this week. Inventories of durable goods decreased 0.2 percent, today’s report showed. The need to prevent stockpiles from falling much more will push factories to increase production, supporting economic growth in coming months. At the same time, exports are growing, which is also a boon for factories. “Overall commercial spending is looking better than what we had hoped for,” Steve Felice, president of Round Rock, Texas-based Dell Inc.’s small- and medium-business division, said Dec. 21 in a Bloomberg Television interview. “We’re coming into this holiday season much more optimistic than a year ago.” More Spending 3M will increase capital expenditures next year by as much as 15 percent to about $1.05 billion, Chief Executive Officer George Buckley said Dec. 22. The St. Paul, Minnesota-based company will spend as much as $100 million to research new products, part of which will be used to hire 60 to 80 employees with doctorates, he said. 3M trimmed about 6,400 jobs worldwide since last year and Buckley said he anticipates no large reductions in 2010 unless conditions change. A decline in orders at Boeing Co., which are often volatile, limited last month’s advance in orders. The world’s second-biggest airplane maker said it received bookings for nine aircraft in November, down from 14 the previous month and 20 in September. To contact the reporter on this story: Courtney Schlisserman in Washington cschlisserma@bloomberg.net

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